More Income and Employment in the Rural Areas of Malawi

Project description

Title: (KULIMA) More Income and Employment in Rural Areas of Malawi (MIERA)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ) and European Union (EU)
Country: Malawi
Lead executing agency: Ministry of Industry, Trade and Tourism (MoITT)
Overall term: 2015 to 2019

Context

Malawi’s economy is highly dependent on agriculture. The vast majority of the rural population are smallholder farmers or are engaged mostly in informal micro, small or medium sized enterprises (MSMEs). Given the very small landholdings, poor access to inputs, services and markets, rural households tend to focus on subsistence farming. The low degree of market integration reduces opportunities to engage in value addition, be it through increasing productivity, processing of raw products or reaching better markets. As such, household and farm incomes remain low and chances for employment are limited.

The Government of Malawi has identified the country’s needs to broaden its export base, increase its productivity and value addition in order to increase national income.

The More Income and Employment in Rural Areas of Malawi (MIERA) Programme have been designed to address these challenges applying an integrated value chain approach with the aim of increasing the income and employment opportunities for smallholder farmers and MSMEs, giving a special focus to women and youth Since 2017 MIERA has been co-financed by the European Union´s new agricultural flagship programme in Malawi – “KULIMA – promoting farming in Malawi”.

Objective

Smallholders and MSMEs "built their business capacity and relationships, added value to their produce, accessed improved services and productive resources, as well as engaged in structured markets to increase their income.

Approach

Applying a value chain approach, MIERA departs from market opportunities that smallholders and MSMEs could increasingly tap into and benefit from, designing appropriate interventions according to each specific value chain’s identified opportunities and bottlenecks. MIERA focuses on the downstream part of the value chain (processing, marketing) and, in three of the supported value chains (cassava, soya and groundnuts), works hand in hand with its sister project, the GIZ Green Innovation Centre for the Agriculture and Food Sector (GIAE) Country Package Malawi, which supports the upstream parts of the same value chains.

MIERA focuses on three main intervention areas:

  1. Promotion of inclusive business models and stakeholder dialogue: MIERA empowers smallholder farmers to deliver the required quantity and quality commodity that the (formal) market requires to substitute imports or tap into export markets. It supports committed companies to set up mutually beneficial and inclusive business relationships such as contract farming that provide input loans and extension packages. The programme also supports dialogue and networking platforms among value chain stakeholders.
  2. Improving value chain services: MIERA works hand in hand with strategic service providers to improve their service delivery and increase smallholder adoption of marketing services such as market information, storage and collateral finance as well as a transparent structured trading platform that often offers better prices. MIERA also works with partners on strengthening their “embedded services” as well as the development and promotion of new types of services such as alternative input provision and financing mechanisms as part of their inclusive business and new marketing models.
  3. Supporting the business capacity of farmer organisations (FOs) and MSMEs: Together with local training institutions and its private sector partners, MIERA develops and delivers training and coaching packages for smallholder farmers, farmer organisations and MSMEs. The trainings are geared towards building business, organisational and management capacity, increase local value addition, increased marketing opportunities and to developing and offering improved services to members and clients.

Results

Together with its partners, MIERA supports the development and successful implementation of a number of innovative inclusive business and marketing models. In doing so, since 2016, MIERA has supported more than 30,000 smallholder farmers and MSMEs directly to engage more actively in value addition and to be structurally integrated into value chains:

  • Since 2017, more than 4,000 farmers have participated in the newly developed Agricultural Commodity Exchange for Africa (ACE) Marketing School, many of them starting to adopt structured trade services offered by the partner ACE and organising collective marketing.
  • In 2017 KULIMA MIERA has successfully piloted the GIZ Farmer Business School approach in Malawi in cooperation with its partners, training 23,000 smallholder farmers on farm economics, agribusiness and marketing skills. Many participants have already started introducing new farm business management practices such as record keeping or gross margin analysis.
  • In the cassava value chain six farmer organisations have been supported through long-term business coaching. Additionally, more than 150 MSMEs have been trained on better processing, business and marketing opportunities for cassava products and are now starting to tap into new retail markets for their value-added products.
  • As part of KULIMA MIERA supported inclusive business models such as contract farming more than 300 marketing and contract farming agreements have been signed between lead companies and farmer organisations, linking farmers directly to better output markets and increasing their access to improved inputs and extension.

MIERA has helped the Agricultural Commodity Exchange to develop and implement a coherent rural and organisational strategy for the next five years that aims at better reaching smallholder farmers and MSMEs through more meaningful support and marketing services such as adapting the Warehouse Receipt System to their needs.

On an institutional and policy level, the programme has supported a number of processes such as organising a national dialogue forum for cooperatives, their apex organisations and other key stakeholders, where institutional challenges and hindrances for the emergence of business-driven cooperatives and farmer associations were identified. Concerted actions to address these challenges have been started. Finally, in the tourism sector, the national tourism policy has been revised, a marketing framework has been developed and capacities of the national training provider strengthened in order to better reflect the needs of the private sector.